KRA suggests collecting crypto taxes; Kenya is moving towards regulation by CoinEdition

KRA suggests collecting crypto taxes; Kenya is moving towards regulation
  • The KRA proposed collecting taxes from crypto transactions as part of the new regulations.
  • If Parliament approves the proposal, the authority will begin to implement the regulations.
  • The move aims to reduce foreign borrowing by expanding the scope of domestic taxes.

The Kenya Revenue Authority (KRA) has proposed taxing cryptocurrency transactions on all exchanges, and expects members of Parliament to approve the tax proposal and thus regulate “rapidly growing digital currency trading,” a first in Kenya’s history. Establish strict regulations in cryptocurrency trading.

In accordance with the Capital Market Adjustment Act, the Government of Kenya proposes to introduce an excise tax of 20% on cryptocurrency exchanges and digital wallets, a move to expand domestic taxation and thus reduce foreign borrowing.

Additionally, cryptocurrency holders are required to submit relevant information regarding their crypto assets to the Capital Markets Authority (CMA) for tax collection purposes:

A person who owns or deals with a Digital Currency must provide the Authority with the following information for tax purposes – the amount of proceeds from the transaction, any costs related to the transaction, and the amount of any gain or loss from the transaction.

According to the proposal, if the bill is approved, Kenyans will pay KRA capital gains in return for increasing the market capitalization of cryptocurrencies while trading digital currencies.

Mosop MP Abraham Kirwa said that laws relating to income tax will apply to digital currency held for less than twelve months, and laws relating to capital gains will apply to cryptocurrencies held for more than twelve months.

Moreover, he said:

The amendment will provide specific provisions for regulating digital currency transactions in Kenya, including the definition of digital currencies, their creation through crypto mining, and provision of regulations on digital currency trading.

In addition, the amendment explains the responsibilities of cryptocurrency holders: “Provide taxation, ownership and provisions to promote innovation in this area.”

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